Goldman's Blankfein Urges Politicians To Help U.S. Business Put $1 Trillion To Work

WASHINGTON, DC - JULY 18: Lloyd Blankfein, Chairman and CEO of the Goldman Sachs Group, speaks at the Economic Club of Washington luncheon, on July 18, 2012 in Washington, DC. Mr. Blankfein spoke about global economic issues and the state of job creation in the United States. (Image credit: Getty Images via @daylife)

Goldman Sachs CEO Lloyd Blankfein believes a combination of economic reforms and a solution to the fiscal cliff can motivate U.S. businesses to put the $1 trillion on corporate balance sheets into motion.

Blankfein, writing in a Wall Street Journal op-ed, urged Washington, D.C. to arrive at an immediate compromise on the fiscal cliff, the series of tax increases and spending cuts that would trigger a recession next year. Here, Blankfein recognizes a key fact: "Any political agreement to cope with the 'fiscal cliff' will require flexibility and shared sacrifice that some in both parties seem unwilling to allow." He rightly realizes that the best solution will require a mix of measures that increase government revenue and cut some costs. It's unclear, after two failed debates on this subject, whether Capitol Hill is as conscious about this as this Wall Street top dog.

The investment-bank executive goes further. He advocates for more spirited foreign trade. For better energy policy. For changes to immigration laws that would allow foreign entrepreneurs and businesspeople to stay and work and contribute.

In all, Blankfein's remarks reflect a cool response to the situation. There's no venom directed toward the White House or Congress. (Though, he does begin in a somewhat unfair fashion. He tells President Obama to be a bit more like Franklin Roosevelt; he praises how FDR eventually found a way to work with corporate America. Yet, Roosevelt had the benefit of a war effort to fuel that growth and cooperation.) In all, Blankfein, the leader of the company branded as America's vampire squid, seemed more collected than constrictive. And worth noting: Blankfein isn't shy about expressing himself; he earlier this year signed on as a corporate spokesperson for gay rights.

The timing of the op-ed is especially intriguing. It's a day after the White House released the guest list of the CEOs invited to meet with President Obama and discuss the fiscal cliff. That was a tally of corporate titans like Pepsi's Indra Nooyi and General Electric's Jeff Immelt. But missing were any finance chiefs. No invites for men like Blankfein or JPMorgan Chase's Jamie Dimon or Wells Fargo's John Stumpf—executives leading companies finely attune to the nature of the U.S. economy. They're folks with MBAs to spare. You have to think their ideas and thoughts about the cliff would stimulate as much dialogue as these other executives, if not more. Unfortunately, the attitude on Pennsylvania Avenue toward Wall Street is chilly. Big banks threw their lot in with Republican Mitt Romney during the campaign. Now, they pay the price.

The stakes behind Blankfein's comments are particularly illuminating of America's current situation. Cash in corporate America exists somewhere in a great mound. There's roughly $1 trillion waiting to be put to work, as soon as businesses feel confident enough to stick out as much as a toe. Business spending and investing is restrained and will stay limited as along as we don't have any answers. Blankfein correctly points this out, and he also aptly sums up what would happen if business received some clarity: "Companies will increase their capital expenditures (currently at anemic levels), contributing to a virtuous cycle of jobs and growth."